More couples divorce over money arguments than any other type of arguments, according to a recent study by the School of Family Studies and Human Services. Whether you are married or not, finances can be a contentious part of any relationship. And the high number of couples forgoing marriage or living together before getting married means that you don’t have to tie the knot to intermingle your financial strings. Before you do take the leap into shared money, however, heed the following bits of advice.
Laying the Groundwork
If you aren’t sharing money yet and you already argue over who buys the movie tickets or your partner’s tendency to overspend, don’t jump into a shared checking account yet. Instead, get some financial counseling. When looking for a financial adviser, don’t hire someone who carries that title just to sell you life insurance. Instead, look for a fee-based service that provides advice rather than selling products. If possible try finding a program like Harmony. Focused on helping couples in this situation, Harmony is run by Lantern Financial LLC in Boston, and the program helps couples learn about budgeting, saving and spending before the topic gets contentious.
If you and your partner make relatively similar sums of money or if you simply want to keep things fair, try an equal approach to financial entanglement. Open a joint checking account with the help of the experts at BBT.com and arrange for each of you to contribute the same amount of money into it each month. If you have direct deposit through your employer, arrange to deposit some money into this account and the rest into your personal account. Pay the rent, TV companies, electricity and other shared bills from the joint account, and use your personal account to cover expenses that you haven’t merged yet like your car payment or your cell phone bill.
Don’t forget to set aside some fun money for whatever you like as well. If you want to save together for something special like a vacation, a wedding or a down payment on a house, start a joint savings account and make deposits under a similar system.
Percentage of Your Earnings
If you earn different sums of money and you want to enjoy a lifestyle that the lower wage earner couldn’t afford on his own, try contributing a set percentage of your income to the common fund. If your partner makes $80,000 but you only make $20,000, this scheme allows both of you to contribute to the common fund while still keeping your own spending money. In any financial sharing scheme, it is important to keep some of your own funds separate. You need at least a small discretionary fund that you don’t have to discuss with your partner. Having a small amount of autonomy will help you preserve your independence, and ultimately keep your relationship stronger.
A shared checking account is the easiest way to handle joint expenses, but it isn’t the only option. Splitwise is a free iOS and Android app that calls itself the “fairness expert.” Use this app to keep track of who contributes what and to generate IOUs; the app will even do the math for you.